CIBAFI 'comments on exposure draft'

Manama, July 2 (BNA): The Council of Islamic Banking and Financial Institutions (CIBAFI) has "thanked the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) for giving the opportunity to the Islamic Financial Services Industry to comment on the Exposure Draft (ED) and provided collective feedback of its member institutions from over 33 jurisdictions, comprising the following key points." "Firstly, the ED states that the investment categories are divided into: equity-type instruments; monetary debt-type instruments; non-monetary debt-type instruments; and other investment instruments. CIBAFI and its members are concerned that it might be difficult to apply these categories to Sukuk in general, especially to hybrid or mixed Sukuk which include equity and debt contracts (e.g. Murabahah/Mudarabah). The revised ED should address more clearly hybrid structures that represent convertible, exchangeable or perpetual Sukuk, which are structures that may mutate over time." "Secondly, CIBAFI members noted that, although non-transferable Sukuk fall outside the scope of this ED, there may be some Sukuk which are in principle tradable but which in practice represent syndicated financing, and might be better classified as ‘loans or receivables’ than investment instruments, even ones which will be held-to- maturity investments. This could in principle create a difficult borderline. "Thirdly, CIBAFI noted that the definition of "participatory structure" in the ED refers among others to sharing losses. This could be taken to exclude Mudarabah structures, where the losses fall exclusively on the Rabb ul Mal, although in other respects it would be right to treat these as participatory. Some CIBAFI members suggest rewording the definition appropriately." "In addition to policy and regulatory advocacy, CIBAFI continues to support the Islamic Financial Services Industry through various activities and initiatives. These include providing industry stakeholders with a platform to discuss emerging issues, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes."